Pennsylvania

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    Exclusive: MSC’s Dave Spigelmyer Goes On the Record with MDN

    Dave Spigelmyer

    Last Friday MDN editor Jim Willis had the pleasure of speaking (via phone) with the president of the Marcellus Shale Coalition, David Spigelmyer. Some 300 companies make up the membership of the organization–including all of the top exploration & production (E&P) companies and midstream (pipeline) companies operating in our region. Dave himself used to work for Chesapeake Energy once upon a time. He is a Pennsylvania boy, born and bred, and knows the industry inside and out. Dave made time to speak with MDN about a wide range of issues. We should note nothing was “off limits”–Jim asked some tough questions. Below is a transcript of that interview. We tackle topics including the Marcellus industry outlook for 2017, the commodity price of natural gas in our region vs. other locations, the proposed severance tax in PA, various pipeline projects, the Shell cracker, MSC’s lawsuit against DEP Chapter 78a regulations, and the “civil war” between drillers and landowners over the royalty issue. It’s all in there…
    Read More “Exclusive: MSC’s Dave Spigelmyer Goes On the Record with MDN”

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    PA Report Says Marcellus/Utica Can Support Up to 4 More Crackers

    Pennsylvania hired research firm IHSMarkit to study the Marcellus and Utica and how many ethane cracker plants the region can comfortably support. Denise Brinley, a special assistant to the Secretary of the state Department of Community and Economic Development, offered a preview of that report at this week’s Hart Energy Marcellus Utica Midstream conference in Pittsburgh. Although the report is due to be published “in the next few weeks,” Brinley spilled the beans on what it concludes: The PA Marcellus can support another two cracker plants, and the Utica can support two crackers. That’s another four cracker plants, theoretically, that our region can support, in addition to Shell’s ethane cracker. However, the study will also show we need more infrastructure (i.e. pipelines) in order to support such projects. Here’s a glimpse into some very exciting news…
    Read More “PA Report Says Marcellus/Utica Can Support Up to 4 More Crackers”

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    PA Counties Say Keep Impact Fee, Even if There’s a Severance Tax

    The organization that represents county governments in Pennsylvania, the County Commissioners Association of Pennsylvania (CCAP), has a message for Gov. Wolf and state legislators: Even if you pass a severance tax, keep the impact fee in place. It has, over the past five years, become critically important for all counties across the state–not just counties where drilling takes place (those “impacted”). Not only do counties want to maintain the impact fee in general, they specifically want to keep it as it is currently structured–how much drillers are taxed and how the revenue is split. The message loud and clear coming from CCAP: don’t screw with the impact fee, even if you want to (boneheadedly) add a severance tax…
    Read More “PA Counties Say Keep Impact Fee, Even if There’s a Severance Tax”

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    PA Town Grapples with Setbacks – from Bore Hole or Edge of Pad?

    The issue of “setbacks” has always been a contentious issue when it comes to oil and gas drilling. A setback is the distance from a well to nearby structures–like water wells, homes, schools, whatever. In Pennsylvania the state law requires a minimum of 500 feet between a well and nearby structures. But here’s the thing: Do you measure the distance (as drillers maintain) from the bore hole drilled into the ground? Or from the edge of the well pad? A pad is typically 3-5 acres, and if you measure from the edge of the pad, the “actual” distance from the well to a nearby structure may be 1,000 feet instead of 500 feet. Some argue that measuring from the edge of the pad makes more sense–to protect nearby residents from noise, lights, air emissions, etc. But drillers in some locations are hamstrung, especially if the the location where they drill is on a slope or other tough terrain. Measuring from the edge of the pad may mean not drilling at all. It is that very issue now being debated in Murrysville, in Westmoreland County, PA (near Pittsburgh). It is a wisdom of Solomon kind of issue…
    Read More “PA Town Grapples with Setbacks – from Bore Hole or Edge of Pad?”

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    Middletown PA Decides to Blow $45K (not $100K) on Mariner 2 Study

    Rabidly anti-drilling organizations like the Philadelphia-based Clean Air Council (CAC) have been using the deep pockets of their contributors to stir up dissent against Sunoco’s Mariner East 2 NGL pipeline, particularly in towns in the Philly orbit (see Towns Near Philly Collude with CAC to Block Mariner East 2 Pipe?). CAC has towns like Middletown (Delaware County) so agitated, Middletown’s town council foolishly voted to allocate $100,000 out of $1.8 million the town received for leasing rights-of-way for the pipeline to assess risks and create an emergency response plan for the pipeline (see Mariner East 2 Tells PA Town: You’re Flushing $100K Down Toilet). Sunoco politely told Middletown they’re flushing 100 grand down the toilet. Federal guidelines already provide most if not all of the information (and planning) required to protect the good citizens of Middletown. So instead of blowing $100K, the town council voted this week to blow $44,500 instead…
    Read More “Middletown PA Decides to Blow $45K (not $100K) on Mariner 2 Study”

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    Marcellus Gas Saves 438 Jobs at PA Paper Manufacturer

    Domtar Corporation designs, manufactures, markets, and distributes pulp, paper, and personal care products from facilities in Elk and Clearfield counties in North Central Pennsylvania. PA Gov. Tom Wolf’s office excitedly announced yesterday that the company has decided to stay in PA and not move, making “significant infrastructure and equipment upgrades at its facilities.” The decision means that 438 jobs will stay in the Keystone State rather than move elsewhere–good for Pennsylvania. Which is all mildly interesting. However, the primary reason they’re sticking around is what caught our eye: the operation is converting from burning coal for energy to burning clean, cheap Marcellus Shale gas. The PA Commonwealth Financing Authority is kicking in $1 million from the Pipeline Investment Program (PIPE) grant fund to pay for a three-mile natural gas pipeline to Domtar’s Elk County paper mill facility…
    Read More “Marcellus Gas Saves 438 Jobs at PA Paper Manufacturer”

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    William Penn Foundation at Center of $100M Dela. Basin Collusion

    One of the worst of the worst non-profit organizations that continues to fund anti-shale activities in the Marcellus/Utica is the William Penn Foundation. By all rights their non-profit (i.e. tax-free) status issued by the IRS should be revoked because of their overt support of anti-fracking initiatives. But we’re not holding our breath. MDN friend Tom Shepstone has written extensively about this odious organization and the many puppet groups it supports (see Tom’s article No Pipeline Capacity? No Jobs? Blame William Penn Foundation.). Here’s just some of the money issued by William Penn to radical anti groups: Sierra Club Foundation – $350,000; Penn Future – $275,000; Clean Air Council – $200,000; Delaware Riverkeeper Network – $290,000; New Jersey Conservation Foundation – $205,000; PennEnvironment – $110,000; EarthJustice – $200,000. Millions of dollars buys a lot of influence (and a lot of people). Another organization supported in part by William Penn is the taxpayer-funded StateImpact Pennsylvania, a PBS train wreck. StateImpact is a mouthpiece for William Penn. So we found it interesting that they ran an article (no doubt commissioned by William Penn) that admits William Penn and nearly $100 million (from William Penn and other sources) is at the nexus of some 40 “conservation” groups colluding in their attempt to keep development out of the Delaware River Basin. That development includes farming and shale drilling…
    Read More “William Penn Foundation at Center of $100M Dela. Basin Collusion”

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    PA IFO Predicts 2016 Impact Fee Revenue Will Drop Another 7%

    Click for larger version

    Each year since 2012 Pennsylvania has assessed and collected their version of a severance tax–called an impact fee. As you can see from the chart, the first three years’ worth of collections were over $200 million per year. But starting in 2015 and the collapse of oil and natural gas prices, drillers laid down many of their rigs, and the gas slowed down–resulting in lower tax (whoops, fee) collections. Which is to be expected. In PA, the impact fee is collected and disbursed by the Public Utility Commission (PUC). However, a different state agency, the Independent Fiscal Office (IFO), analyzes production and does a pretty fair job of estimating what the collections will show. Last July the IFO made predictions for 2016 collections that range from $5 million to $56 million below what was collected in 2015 (see PA Independent Fiscal Office Predicts Impact Fee Revenue for 2016). With production numbers now updated by the PA Dept. of Environmental Protection, the IFO has re-run the numbers and now has a much better idea of what collections, which occur in April, will show. The IFO says the state will collect $174.6 million in impact fees, which is $13.1 million (~7%) less than last year. Perhaps most interesting is a number calculated by the IFO called the “Effective Tax Rate” (or ETR). The ETR is what the impact fee would be if it were called a severance tax. Last year the ETR was 6.9%. This year it will be 5%. When you add corporate income taxes paid by drillers to the ETR, you get a “severance tax” rate that is higher than any other oil and gas producing state! And still RINOs and Democrats want to tack on an extra severance tax. Blithering idiots…
    Read More “PA IFO Predicts 2016 Impact Fee Revenue Will Drop Another 7%”

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    PA Royalty Bills Approved by Senate Panel, Sponsor Chides House

    Yesterday a Pennsylvania State Senate panel met to discuss two bills that would help landowners in their quest for more visibility into how royalties are calculated–and what kinds of expenses are deducted (see 2 Royalty Bills Focus of PA Senate Hearing Today). As we said yesterday, Senate Bill (SB) 138 will allow landowners the right to review drilling company records to verify proper royalty payment. It also requires drillers to pay royalties within 90 days of production. SB 139 prohibits drillers from “retaliating” against a landowner who questions royalty payments by canceling the lease or stopping drilling activity. Both bills were unanimously approved by the Senate panel and will go to the full Senate for a vote. However, as the bill’s prime sponsor Sen. Gene Yaw indicated, the Senate is not the problem. Last session the same thing happened–speedy passage by the Senate. Then the bills got bogged down in the PA House because they were attached to another bill that guarantees a minimum royalty of 12.5% regardless of post-production costs. That bill has proven toxic–vigorously opposed by the drilling industry. Sen. Yaw’s not-so-subtle message to the House: Don’t repeat the same mistake this year. Let these bills stand on their own…
    Read More “PA Royalty Bills Approved by Senate Panel, Sponsor Chides House”

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    FERC Delays PennEast Pipe 3rd Time, PennEast Spins as ‘Good News’

    PennEast Pipeline is a very important $1 billion, 118-mile, primarily 36-inch pipeline that will get built from Dallas (Luzerne County), PA to Transco’s pipeline interconnection near Pennington (Mercer County), NJ. It will feed local utilities and power generation plants along its route. In April 2016 the Federal Energy Regulatory Commission (FERC), which oversees permitting for the pipeline, told PennEast the agency would extend the amount of time they are taking until December 2016, rather than the original target of August, to complete their environmental review (see PennEast Spins FERC Delay as a Good Thing – Optimism or Denial?). It was (for us) a small red flag. Hey, it happens. Projects get delayed because regulatory agencies get bogged down. But then it happened again: FERC told PennEast they would once again move the goal posts and delay the final environmental review from December 2016 to February 2017 (see FERC Delays PennEast Pipeline Final Review – Again). Hmmm. Bigger red flag. Now FERC is doing it for a third time, which is a huge red flag in our book. FERC issued a statement on Friday to say the final environmental review now won’t happen until April. What’s going on? And why is PennEast once again spinning this as some sort of “good news”?…
    Read More “FERC Delays PennEast Pipe 3rd Time, PennEast Spins as ‘Good News’”

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    2 Royalty Bills Focus of PA Senate Hearing Today

    PA Sen. Gene Yaw

    Last week MDN brought you the news that several northeastern Pennsylvania counties are investigating an alliance to push for passage of a bill like last session’s House Bill (HB) 1391 to guarantee landowners receive a minimum 12.5% royalty regardless of post-production costs (see Northeastern PA Counties Explore Alliance to Pass Royalty Reform). However, landowners and those who support them in the PA legislature are not pinning all hopes on a guaranteed minimum royalty bill. Also proposed in the last session (2015/2016) were two bills meant to greatly assist landowners in their quest to monitor royalty payments and how they are calculated. In January 2015 (almost exactly two years ago) PA Senator Gene Yaw, who represents several counties in northeast PA, re-introduced Senate Bills (SB) 147 & 148 (see PA Senate Reintroduces Two Marcellus Royalty Bills, SB 147 & 148). “Re-introduced” in 2015 means both bills were introduced in the previous session (in 2013/2014). SB 147 would have allowed landowners the right to review drilling company records to verify proper royalty payment. It would also have required drillers to pay royalties within 90 days of production. SB 148 prohibits drillers from “retaliating” against a landowner who questions royalty payments by canceling the lease or stopping drilling activity. Both bills were embraced by the Pennsylvania chapter of the National Association of Royalty Owners (NARO). They both passed the Senate and stalled in the House. Now, for the third time (going on the sixth year) Sen. Yaw has re-introduced both bills again. This time they are called SB 138 & 139 (full copies below). Sen. Yaw isn’t wasting any time–he’s holding a hearing today to discuss both bills. Will this time be successful?…
    Read More “2 Royalty Bills Focus of PA Senate Hearing Today”

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    RINOs and Dems Ramp Up Severance Tax Bills in PA Legislature

    “As a dog returneth to his vomit, so a fool returneth to his folly.” (Proverbs 26:11, King James Version) We could think of no better way to convey the news that no less than three so-called Republicans from the Philadelphia area, and a plethora of Democrats, are in the process of introducing severance tax bills in the Pennsylvania State Legislature, once again. The bills range from assessing a 3.5% tax all the way up to 9%. We won’t repeat our many MANY arguments for why such a tax is just plain stupid. We’ll just share with you who (in the PA legislature) wants to steal money from landowners and drillers and give it to teachers’ unions…
    Read More “RINOs and Dems Ramp Up Severance Tax Bills in PA Legislature”

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    US Steel Plant in PA Re-Opening – Manufacture Atlantic Coast Pipe?

    A former U.S. Steel pipe manufacturing plant near Pittsburgh (in McKeesport) has been leased to Dura-Bond Industries and will re-open in the next 6-9 months, according to the president of Dura-Bond. The plant will hire around 100 people (fantastic news for Pittsburgh). According to the Pittsburgh Business Times, Dominion’s $5 billion, 594-mile Atlantic Coast Pipeline–a natural gas pipeline that will stretch from West Virginia through Virginia and into North Carolina–will use Dura-Bond pipe. Our conclusion: One of the reasons (perhaps THE reason) for the McKeesport facility re-opening is to produce Atlantic Coast Pipeline pipes…
    Read More “US Steel Plant in PA Re-Opening – Manufacture Atlantic Coast Pipe?”

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    Handful of Butler Co. Residents Still Suing Rex Energy 5 Years Later

    For years MDN has reported on a lingering/ongoing story of a community in western Pennsylvania (in Butler County) who say that nearby drilling by Rex Energy led to contamination of their well water supplies (see PA Residents Weary of Fight with Rex over Water Contamination and Rex Energy Water Contamination Case Shifts Focus to Water Pipeline). Several of the families sued Rex. The PA Dept. of Environmental Protection, after an extensive investigation, said that Rex’s drilling is not at fault in the situation. However, for most of the families, the issue progressed beyond blame–apparently water quality in the area was never the greatest to begin with. Rex had built a water line in the area to supply water for fracking and had expected to turn over control/ownership of that line in 2013. That water line can potentially be used to supply fresh water to the affected homes. The debate has been: Who will pay to hook up the homes and to maintain the pipes and infrastructure required? Since Rex, according to the DEP, is not to blame for the poor water quality in the area, the company understandably doesn’t want to pay big bucks to connect and maintain the line to residences in the area. As far as we can tell, the line is not hooked up. The families with bad water still have bad water and depend on donated water to this day for drinking and cooking…
    Read More “Handful of Butler Co. Residents Still Suing Rex Energy 5 Years Later”

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    Northeastern PA Counties Explore Alliance to Pass Royalty Reform

    One of the issues that isn’t going away is the demand by landowners in some Pennsylvania counties, like Bradford, for lawmakers in the state to pass a bill that guarantees them what they believe they are already guaranteed–a 12.5% minimum royalty, based on a 1979 law that states they should get such a royalty. We’ve extensively covered what we call a civil war between two parties who are otherwise friendly toward each other–landowners and shale drillers. Last year the issue came to a head with House Bill (HB) 1391 (see our list of stories here). In a nutshell, landowners say Chesapeake Energy and some other drillers are taking post-production deductions out of landowners’ royalty checks, resulting in royalty payments far below 12.5%. In some cases landowners are receiving bills for money owed to the driller–after the driller pulled the gas out of the ground! Who in their right minds leases land for drilling so they can PAY the driller! It is an outrage and landowners want it stopped. Drillers, on the other hand, say you can’t just change contracts after they’ve been signed, punishing the entire industry for the bad actions of a few. Drillers say the proper response is for landowners to sue the bad apples. Frankly, it’s all a mess. The new news is that landowners from Bradford and several other northeastern PA counties, tired of being outmaneuvered by drillers, are actively talking about forming an alliance to try and garner enough support in Harrisburg to get a bill like HB 1391 passed this year…
    Read More “Northeastern PA Counties Explore Alliance to Pass Royalty Reform”

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    Major CNG Virtual Pipeline Coming to Susquehanna County, PA

    MDN has had an eye on a trend we find exciting–“virtual pipelines”–by which we mean facilities that are located along a pipeline that compress the gas (CNG, or compressed natural gas), load it onto tanker trucks, and then distribute that gas to businesses that are not fortunate enough to be located near a natgas pipeline. With irrational opposition to pipelines seemingly rampant, virtual pipelines are a good alternative. We were first alerted to this trend when International Paper’s Ticonderoga mill in northern New York, near the Vermont border, opted for a virtual pipeline from NG Advantage, back in 2015 (see NY Paper Plant Opts for “Virtual” NatGas Pipeline Over Real One). NG Advantage has established a presence throughout New England, most recently adding Maine to their delivery options (see NG Advantage’s “Virtual” NatGas Pipeline to Maine Begins Flowing). A Camp Hill, PA-based company, Compass Natural Gas Partners, recently got into the virtual pipeline business in Lycoming County, PA (see Look Ma, No Pipeline! Lycoming County Co. Begins CNG Shipments). Yesterday PA Gov. Wolf issued a press release to say another company is starting up a virtual pipeline–this time in Susquehanna County, PA (MDN’s backyard). Xpress Natural Gas (XNG) will spend $18.6 million to build a facility that will employ nearly 90 people and load up to 100 tanker trucks a day for deliveries to customers across the Northeast and Mid-Atlantic states…
    Read More “Major CNG Virtual Pipeline Coming to Susquehanna County, PA”